SAP Ventures Backs Lavante: Despite Hiccups, the Supplier Management Gets a Vote of Support (Part 1)

Spend Matters has spent quite a bit of time covering vendor happenings in the supplier information management (SIM) and related markets of late. Some providers in the sector, such as Aravo and Rollstream, appear to be winning a select number of middling to larger deals (not to mention, in Aravo’s case, rolling out key new functional capability for direct materials). On the other end of the spectrum, SupplierForce has entered voluntary liquidation in Ireland. And there are two other vendors which have been actively shopped on the market of late and a third, that earlier this fall was in the midst of trying to raise a funding round. In this niche market, it’s certainly been a busy — and bifurcated — fall from a vendor perspective, that’s for sure. Capping this activity last week was Lavante’s Series C funding round announcement, with SAP Ventures taking a lead role in the investment.

According to the announcement, in addition to SAP Ventures, “This C round of funding also includes participation from current investors ATA Ventures and Venrock.” But outside of SAP, the specifics of the backers are not important (even though I suspect that all will receive a decent payout at some point, as we believe that Lavante is approaching the supplier management market from a unique and arguably more attractive and lucrative manner than many other providers in the space). As we have written in the past, “Most traditional supplier information management vendors approaching the supplier management challenge have opted to focus on enabling specific tasks, largely centered on improving the procurement and auxiliary supplier management functions. These tasks and focus areas have included supplier enablement (for eProcurement and general on-boarding), supplier diversity (both single and multi-tier management and tracking), supply risk reduction and visibility, CSR, supplier performance management, supplier development and supplier quality (note that not all of these are mutually exclusive) … Lavante, in contrast, has sold into the sweet spot of the audit recovery market: finance organizations — and to a lesser degree, finance adept procurement teams.”

This business model twist has allowed Lavante to grow and deliver revenue growth more closely tied to actual value created rather than just an annual subscription software license. Yet the functional similarities with existing supplier management applications are very real…